Google, after having swallowed up the web-based word processor Writely, is now …

Googlespotting can be an amusing if sometimes tiresome game, with many stories (such as the GoogleOS and Google Browser) turning out to be nothing more than wishful thinking on the part of eager Internet denizens. However, occasionally the rumors turn out to be true, especially if they are backed up by a reliable source.

In this case, the source is the Wall Street Journal, which has reported (subscription required) that Google is planning to release their own spreadsheet application to compete with Microsoft Excel.

This news comes on the heels of the company's March purchase of the web-based word processing application Writely. Writely was billed as "The Web Word Processor," and used AJAX, XML, and ASP.NET technology to deliver a fairly convincing simulation of a word processor, albeit a fairly feature-thin one. The program allowed the import of Microsoft Word documents and featured the ability to easily collaborate with other users, as well as offering quick and easy publishing in HTML format for the web.

It is not known at this time whether Google is planning to purchase one of the existing web-based spreadsheet applications such as EditGrid or iRows, or whether the company plans to release their own version from scratch. Given Google's history, it seems that the former option is probably the most likely. Although these applications are fairly simple to create—the company that created Writely had only four employees at the time of the Google purchase—it is still easier and faster to purchase an existing solution rather than rolling one's own.

So what is the ultimate goal of Google in going after Microsoft Office replacements? Some may look at it as simply an opportunity to attack Microsoft by releasing free, web-based versions of their bread-and-butter applications that can be used on any platform. However, Google did not get to be the company it is today by merely engaging in "Let's attack Microsoft" thought patterns. Microsoft is not easily hurt by the mere existence of free, cross-platform Office replacements—after all, OpenOffice has been around for a long time, and yet the company is still doing very well with Office sales.

Instead, I think Google's approach is more clever. By getting even a small number of people to do their word processing and spreadsheet creation online, the company could, in theory, leverage all sorts of useful data about the contents of these documents. Just as Gmail messages are delivered with content-sensitive AdSense ads, so could documents. For example, if a user starts creating a spreadsheet about Future Widget Sales Growth, the web-based application could load ads pointing to alternate Widget suppliers. This would make AdSense even more desirable for potential advertisers. Also, giving away a new free application would drive traffic to Google's servers, which also increases their potential revenue stream.

Still, will people really start doing their spreadsheets online? Most people tend to be a little more protective of their spreadsheet data, often because the numbers represent data that is supposed to remain confidential within a company. However, for casual users who use a spreadsheet simply to create and manage lists, a web-based option might be a useful one.